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questions and answers microeconomics
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microeconomics 15 questions with answers of the midterm test.
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MicroeconomicsMidterm test
1. Your nominal income is CZK 10,000. The price of a meal is CZK 100. Your real
income in terms of meals is 100 meals: You can afford to buy 100 meals for your
income. What happens to your real income in terms of meals if the nominal price
of a meal increases to CZK 125?
Answer: it decreases to 80 meals
2. Two primeval men, Hunter and Gatherer, meet in the forest. Hunter carries 20 kilos
of meat and Gatherer carries 20 kilos fruits. Gatherer offers 2 kilos of his fruits to
Hunter in exchange for 1 kilo of meat. If Hunter killed Gatherer, he would gain all
his 20 kilos of fruits, which would increase his utility by 200 degrees of utility at no
cost. If he accepted the deal, he would gain 2 kilos of fruits which would increase
his utility by 60 degrees of utility and he would lose 1 kilo of meat which would
decrease his utility by 20 degrees. If Gatherer gained 1 kilo of meat he would
increase his utility by 50 degrees and if he gave up 2 kilos of fruits he would
decrease his utility by 10 degrees. How many times should they meet repeatedly
for the same transaction so that trade pays for Hunter in comparison with robbery?
Answer: 5
3. Your Marginal utility function is MU=4-2Q. What is your Total utility function?
Answer:*TU=4Q-Q²
4. England is able to produce 1t of textiles using 100 hours of labour or 1t of wine
using 120 hours of labour. Portugal is able to produce 1t of textiles using 90hours
of labour or 1t of wine using 80 hours of labour. Find out which country has the
comparative advantage in the production of textiles and which in wine. What will
be the total production of both if they specialise according to their comparative
advantages and each employs 86.4 million hours of labour?
Answer: 864,000t of textiles and 1,080,000t of wine
5. A curve composed of all combinations of two goods that give the consumer an
equal level of utility is called
Answer: indifference curve
6. A car dealer sells 30 cars when their price is 500,000. After applying a discount,
at the price of 450,000 they sell 40 cars. Find the equation of demand as a line.
Answer: P=650-5Q
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